Most Canadians I know have been trying to process the flurry of activity and political shake-ups that have taken place globally over the course of the last year. The world has gone through some major changes, and 2016-2017 have been action packed in the realm of international politics. Amid the new incoming President of the United States, Donald J. Trump, and the dysfunctions within the European Union (EU) that lead to Brexit, there are major changes taking place in the western world that should get Canada’s attention, and wake-up our government to the very real problems of debt and deficits in the face of a very uncertain economic future. Canada recently signed a free trade agreement with the European Union called the Comprehensive Economic and Trade Agreement or CETA, for short. Given the EU’s recent relationship with debt and deficits, and how this could affect this agreement down the road, the Canadian Government stands to learn a lesson or two from its European counterparts.
The reality of escalating debt in other western nations, and the EU, is not a laughing matter. As the current Canadian government is not taking the debt crisis seriously, intentionally spending and borrowing, with the estimated results leading to an additional 90-150 billion dollars being added to the Federal Debt over the next 3-4 years, we are dangerously approaching the Trillion dollar debt club, which no Canadian should feel good about joining. The situation within the EU, with its current debt crisis and the economic troubles facing the United Kingdom, as they try to end their union with a soft Brexit, are serious in the face of a shaky EU membership base that is dissolving faster than an ice cream sandwich in the middle of the Arizona Desert.
The 28 nation partners forming the EU, have a population over 500 million people spread all over the European Continent, with a total government debt level of 12.4 Trillion Euros. This is equivalent to over 17 Trillion Canadian Dollars. That’s a 17 followed by 12 zeros! On a per capita basis, that is roughly €24 556or CAD34,000 per citizen. This is astounding. It is also very costly as, every year, EU member states pay hundreds of billion Euros in interest just to keep the debt level steady.In Canada with our nearly 635 billion dollars in federal debt, we are spending over 25 billion taxpayer dollars per year, servicing the interest alone.
The EU has failed to communicate effectively and restrict government waste and abuse of taxpayers’ money, instead growing government and deficits. The results of such bad communications and irrational spending are exemplified in Greece, where the government is left with few options besides bankruptcy. Greece has effectively been turned from a welfare state, to a state on welfare, being barely kept afloat by an IV cord plugged into other EU nations. High debt levels and loss of national autonomy, are amongst the key factors having contributed to Brexit. While the United Kingdom (U.K) never adopted the Euro, sticking with the traditional British Pound (£) instead, its debts are not going to be easy to pay off. Seeing another Commonwealth nation faced with such a challenge should be a major warning to Canadian officials. The U.K.’s debt has skyrocketed over the last decade, and now sits at over 1.7 Trillion Pounds (£1,700,000,000,000), equivalent to over 2 Trillion Canadian Dollars ($2,818,656,593,000). The personal hit per citizen is £28.796, which would be over $40,000 Canadian/per citizen!
This debt crisis in the EU and the U.K. is a wake-up call for Canadians: we need to stop growing government and extending its operations. In the midst of the new CETA free trade agreement, Canada does have economic potential to expand its output and GDP, but should also take note of the dangers of overspending, as evidenced by the crisis’ facing Canada’s future trading partners that could very easily happen here. The EU couldn’t, nor wanted to, see it coming; Canada should see it coming, and stop it in its tracks, instead of screwing the next generation.